Soldiers back from combat see their salary docked or withheld, as the Army strives to update its payroll and personnel systems.

Attacking the Problem

The problem with the systems became apparent in the fall of 2001 when Reserve soldiers were activated by the thousands, first domestically following the terrorist attacks of Sept. 11, and then to international military operations in Afghanistan and, eventually, Iraq. It is the largest Reserve mobilization for combat since World War II; 150,000 reservists have been deployed for combat operations, according to the Defense Finance and Accounting Service, a Defense Department agency that pays all 5.9 million officers, civilians and retirees.

At the time, payroll systems could adjust pay-related information for an entire unit during a typical deployment—say, for two weeks' training—using a processing feature called a "mass update." But it could not automatically process certain pay entitlements because it was not programmed to accommodate newly adopted pay increases for more than 30 days at a time, according to Eric Reid, director of the Army Finance Command. For example, based on an act of Congress, men and women who were performing duties in particularly arduous locations in Iraq for more than 30 days were entitled to hazardous-duty pay of about $100 per month, but were "dropped off" the system at the end of each month, Reid says.

To circumvent the problem in Iraq, workers at a finance office in Kuwait input the names of soldiers who remained on hazardous-duty status—63,000 at one point—into a Microsoft Access database each month, Reid explains. This data was uploaded to the pay system in Fort McCoy, Wis., and records were updated on a mass scale, he says.

However, some soldiers continued to receive the entitlement for up to three months after being redeployed from hazardous duty because of delays in simply getting pay data from unit commanders in the combat zone into the payroll system, according to Reid. And that's when overpayments accrued.

And just as the pay system wasn't set up to quickly automate new pay entitlements, the personnel system couldn't communicate a reservist's initial mobilization for combat into the payroll system. As a result, when reservists were officially ordered into combat by the regular Army, administrators in Reserve field offices would print out paper copies of each soldier's official mobilization order from the personnel system and ship them to the pay center in Fort McCoy, where finance workers keyed each soldier's pay and entitlements into the payroll application.

But the duplicate data entry system was error prone, according to Norma St. Claire, director of information management for the Defense Department's Office of Personnel and Readiness, which has general oversight of human-resources systems. "You have all of this multiple data entry—delays and gaps when things are entered, and manual reconciliations when things don't sync up—and that causes, obviously, the most visible problems with the pay systems," she says.

Senior WriterElizabeth has been writing and reporting at Baselinesince its inaugural issue. Most recently, Liz helped Fortune 500 companies with their online strategies as a customer experience analyst at Creative Good. Prior to that, she worked in the organization practice at McKinsey & Co. She holds a B.A. from Vassar College.